Copper falls on stronger dollar, Chile supply worries cap downside

Copper prices fell on Thursday as a firmer dollar and risk reduction ahead of a long Chinese holiday weekend weighed on sentiment, although worries over supply disruptions at major Chilean mines limited the losses. Benchmark three-month copper on the London Metal Exchange was down 0.4% at $14,565.50 a metric ton by 1001 GMT. Copper, used in power and construction, is up 9% so far this quarter, having hit a record high of $14,875 a ton two weeks ago. Financial markets in top metals consumer China have closed for the Mid-Autumn Festival. Trading will resume on Monday. "China is out, but really it's the macro weight," said Alastair Munro, senior base metals strategist at Marex. The dollar held near a two-month high after a sharp rally, fuelled by expectations of additional Federal Reserve interest rate hikes. A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies, while the prospect of higher borrowing costs affects sentiment towards growth-dependent metals such as copper. China equities saw their biggest one-day decline in a month on Thursday, as investors were sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington would deliver a broader breakthrough. Meanwhile, the premium of the LME cash copper contract over the three-month benchmark widened to $107.5 a ton, highest since September 1, from zero a week ago, signalling tightness for the nearby supply. Adding to supply concerns, operations at BHP's Escondida mine in Chile, the world's largest copper mine, were suspended on Wednesday after a worker was killed in an accident. Separately, two unions representing workers at Antofagasta Minerals' Centinela copper mine in Chile called on workers to hold a strike vote, adding to concerns amid ongoing contract negotiations with workers at Escondida. LME aluminium eased 0.2% to $3,249, zinc fell 0.6% to $3,877, lead dipped 0.4% to $1,912, while tin rose 0.4% to $53,900 and nickel was steady at $16,480.